As projects succeed, we are faced with a paradox. For most of us, the outcome of our projects is growing, but at the same time, growing isn’t always the best choice. With increased size there is always a tradeoff—sometimes it’s speed, other times it’s quality. Whatever the case, there is one truth: After we scale, our product, our team, and our culture will never be the same.
So, how do you know when it’s the right time to scale? And what are some of the possible bumps you may find on the road?
You’ve built a solid core long-term team
I’m putting this one first for one simple reason. It doesn’t matter if you have the best infrastructure, or how profitable your business is, in the end, scaling always changes team dynamics.
The ability to adapt and cope with changes hinges on having a team that’s flexible and willing to take on the challenge that comes with dealing with a bigger project. Teams with unsolved issues are a risk since sudden changes are the perfect environment for old frictions to fester.
On top of having the right team environment, having the same core team throughout the project is one of the greatest assets a manager could hope for. Most scaling solutions involve building on top of what’s already there, which means that a team starting from scratch has to first understand the underlying infrastructure before they can work on the project.
Software developers that have been working on the project from day one have a better understanding of what’s happening under the hood. This, in turn, means that they can make better decisions regarding what to change and how to approach the new stage of the project.
Can you scale without a long-term team? Of course, and it can be an almost seamless process, provided that you have the foresight to prepare beforehand. If your project is well documented, then any software developer can use the documentation to get up to speed and start planning in no time.
Having a clear income path
Being profitable is usually a clear sign that things are going in the right direction. And if profits increase, odds are that you will be thinking about scaling sooner rather than later. But to grow successfully you need to know if your income model can sustain the transformation.
Scaling can mean many things, from increasing your IT team to installing more or better hardware to ramping up your cloud’s processing power. Regardless of what it entails, the common thread is an increase in costs. As the adage goes, “You must spend money to make money”.
Usually, when you scale, so do your profits, but rarely does it happen immediately. It’s less like opening a floodgate and more like slowly increasing a river’s flow. One of the most common mistakes is to overinvest while scaling and then not having the profit margin to hold in the short or mid-term.
Having a clear income path isn’t soothsaying. You can’t predict the future, but you can prepare for it. In fact, an established profit can help you make informed choices and build a project timeline that fits your resources.
Exceeding Previous Goals
While bigger businesses rely on forecasts to make their strategic decisions, small-scale companies or start-ups lack the data and resources to make accurate predictions. So, how can they know if they are ready to scale?
Intuition and business acumen can only get you so far, so you have to rely on some sort of empirical data that can help you make the choice. Fortunately, most companies already have a valuable piece of data at hand: Their goals.
If you find yourself in a situation where you are systematically surpassing your goals, then odds are that sooner rather than later you will have to scale your business and the technology that sustains it.
The keyword here is systematic. As anyone with a grasp of statistics can tell you, exceeding your goals one time isn’t enough to conclude that your business is growing, as you might end up scaling only to find out that you are a victim of regression to the mean.
Growth isn’t the only indicator for scaling. Stagnation can also be a source of information. If you are seeing a hard ceiling on your current margin and you keep seeing the growth potential, then you may be in a situation where your infrastructure is unable to handle new opportunities. That’s also a clear sign that you are on your way to scaling.
Turning Down Potential Business Opportunities
Having to say no to new clients, users, or business partners is the kind of problem we all wish we had. Turning down potential revenue due to infrastructure limitations is a clear indicator that you are on the right track and that scaling should be a part of your business strategy.
Be careful, though, as a sudden surge in business opportunity doesn’t necessarily equate to growth. It can be a situational trend that will recede given due time. For example, it’s well known that most apps see a sudden increase in popularity if they become viral only to drop off a few months after.
There is a fine balance at play in this kind of situation. If you hold off scaling for too long, you might end up frustrating your business opportunities. Act impulsively and you could overinvest, leading to a bigger, complex, and unnecessary infrastructure.
Cloud services alleviate this kind of problem by providing easy tools to adjust and scale as necessary. That’s one of the perks of cloud-based computing. Instead of investing in your servers, adjusting is as easy as pressing a button.
That kind of flexibility is what you want. Don’t go all in, design your scaling solution to adjust upwards or downwards as necessary. You can take risks but always have a safety net.
You Have Proven Your Concept and Have a Reliable Infrastructure
It should go without saying, but the first step before you even think about scaling is proving that your concept works, that it’s sustainable and profitable. Sadly, 90% of startups fail, and many do for one simple reason, their concept doesn’t work.
On top of a concept, you need an infrastructure that has survived the test of time, for example. Scaling while relying on buggy software can exacerbate the problems and bring your business to a halt.
Do dare to dream, but be mindful. We all want our projects to be the next big thing, but that motivation and passion have to go hand in hand with a healthy dose of reason.